The U.S. economy remains on solid footing, demonstrated by steady job growth, rising wages and, more recently, a healthy upward move in prices. The recent rise in inflationary pressure and a tightening labor market appear to have influenced the Federal Reserve to likely take a more aggressive approach to interest rate normalization than previously thought, now signaling the potential for four Fed funds rate hikes in 2018. The stock market responded negatively to this news, despite continued economic growth and rising corporate profits, and have been volatile as of late. In addition, the recently enacted tax reforms have contributed to greater optimism among both businesses and consumers, prompting a stronger near-term outlook. The resulting reduction in the corporate tax rate and bonus depreciation should drive greater fixed investment going forward. While the U.S. economy hums along, global economies are also on a roll, with emerging markets in Latin America and Asia, as well as strengthened Eurozone economies. This supports a call for more hawkish monetary policy. This renewed growth in international markets has supported U.S. exports, driving increased optimism among domestic manufacturers. A product of the continued growth and of expectations for further monetary policy normalization globally, the sustained weakness of the U.S. dollar should further bolster exports.
Source : CBRE Global Investors